ozzy43

False Data Clobbers the Markets

True enough yank - the manipulations in both gold and silver is, IMO, pretty well established (and has provided for a terrific buying opportunity, IMO, for the long term investor). Hell, so is the recent Central Bank manipulation in the dollar, for that matter, which has had its own impact on commodities.

But let's not stop there - let's look at the macro picture - the author of this piece suggests:

"Why doesn't the government just hold off a few weeks before releasing its reports? No data is better than false data. The latest GDP growth revision is absolutely inexcusable. I can handle a small revision from 3.1% to 3.2% but 1.9% to 3.3%? Wouldn't it be better to just wait another 3 or 4 weeks and get the numbers correct?"

Why in the world would anyone presume that GDP numbers - that issue from the same government that emits the laughably fraudulent CPI - are 'correct' at any point along the revision trajectory?

IMO - it's all false. It's all massaged. It's all a mirage - an illusion. I wonder if the author of the piece above ever bothered to look into how the GDP is actually calculated. As one widely available short essay on the subject notes:

"Much of the data used in GDP is collected by sending out surveys to different companies. They will send out surveys to a select bunch of retailers and manufacturers to ask for details of their output or sales on a monthly basis. Then comes the estimate of the whole. The governments can obviously use this to their advantage by selecting the companies that they know are steady companies and not choose the smaller companies who are more likely to be erratic. Therefore most smaller companies will never get asked to perform a survey for the government as this may upset the figures."

So the number is not only inherently inaccurate (and we have not even gone into the forms of economic activity that the GDP explicitly excludes), it is an invitation to governmental manipulation. After all, how would one prove that "the economy" (as though this were so easily defined in the first place!) grew at this rate or that rate? The only reason to believe the govt stats are accurate is if you believe the govt does not lie as easily as you and I breathe, which is demonstrably false.

So it's not just metals, not just the market, but the entire economic picture as portrayed by government statistics that is one big manipulation.

As far as I can tell, the one thing that one *can* rely upon is that a government which uses a fiat currency and is out of other options, especially one which is on the hook for $60T+ in unfunded obligations over the next ~75 years and has no other way to 'meet' these, must inflate like mad. Period. And at some point, manipulation or not, that's good news for gold, in the long term. And probably for oil, too, for as long as it's priced in USD anyway.

Students of history will know that in every single instance of the deployment of a fiat currency, starting 1000 years ago in Szechuan Province, China, the outcome is always the same - dozens of examples across history all tell the same story: run away inflation, sky rocketing of gold prices, collapse of the currency.

Those who are not students of history - well, Santayana had them pegged.

False Data Clobbers the Markets

"The bottom line is that this planet is flush with oil and even if it wasn't, we will have alternative technologies for transportation and energy fully integrated into society within twenty years. Cars will run on natural gas, hydrogen, and electricity. Energy will come from solar, wind, geothermal, or nuclear. Take your pick."

Naked assertions without any logic or data to support them are less than persuasive - the author may wish to look up the definition of 'analysis' because this exercise in magical thinking does not qualify. Don't get me wrong - I'm a big fan of magical thinking - it allows me to buy on the dips from folks who engage in it. Let's all repeat together: "oil is not a finite resource - and besides we can always fall back on magic pixie dust if need be."

It really doesn't matter how much oil is in the ground, what matters is whether anyone is ready, willing and able to pay the costs (monetary and otherwise) to extract it. How many polar and deepwater drilling rigs are there in the world? What's the ERoEI for tar sands? Oil shale? Why aren't the IOCs already busy drilling on the leases they have in the OCS? Where does the natural gas come from, given that the same peak dynamics are impacting that fossil fuel as oil? What's the supply situation for uranium look like, and how much energy will it cost to find, mine, extract, transport and process it? How much would it cost to build and operate enough nuclear plants? Wind farms? Solar plants? What's the amortization picture for all those gas fired plants that just got built? What's the feedstock for hydrogen?

And bottom line: who is going to pay for all of this considering we as a nation are dead BROKE and the banks are reluctant to lend money for CARS, let alone for massively capital intensive projects like, say, replacing the entire energy infrastructure of this nation over a quick time span of only a couple of decades?

For those who prefer a little reality in crafting their long term perspective, I suggest the 2005 Dept of Energy Study, and it's 2006 and 2007 follow up reports on mitigation strategies, by Dr Robert Hirsch:

www.netl.doe.gov/publi...
www.d-n-i.net/fcs/pdf/...
www.d-n-i.net/fcs/pdf/...

Hirsch's bio:

* Senior Energy Program Advisor, SAIC (World oil production)
* Senior Energy Analyst, RAND (Various energy studies)
* Vice President of the Electric Power Research Institute (EPRI).
* Vice President and Manager of Research and Technical Services for Atlantic Richfield Co. (ARCO) (Oil and gas exploration and production).
* Founder and CEO of APTI, a roughly $50 million/year company now owned by BAE Systems. (Commercial & Defense Department technologies).
* Manager of Exxon’s synthetic fuels research laboratory.
* Manager of Petroleum Exploratory Research at Exxon. (Refining R & D).
* Assistant Administrator of the U.S. Energy Research and Development Administration (ERDA) responsible for renewables, fusion, geothermal and basic research. (Presidential Appointment).
* Director of fusion research at the U.S. Atomic Energy Commission and ERDA.

Next, google Matt Simmons, CEO of the largest energy investment bank in the world, and take a look at any of the numerous presentations and interviews he's given. Here are some startingf points:

www.financialsense.com...
www.ogfj.com/display_a.../
www.economist.com/peop...
www.simmonsco-intl.com...

Finally, how about testimony from one of the most conservative Repubilcan Congressmen, Roscoe Bartlett:

bartlett.house.gov/Ene.../
www.energybulletin.net...
www.energybulletin.net...

Folks, these are not Birkenstock wearing tree huggers. Not sure what the energy background of the author of this bit of speculative fiction above is, but I'm willing to bet he's just a tad overmatched here.

"The other fallacy among oil bulls is that the growing middle class of India and China will cause a world wide shortage. ...Germany, Italy, Spain, France, Japan and Russia are losing drivers every year. By 2030 there will be 80 million fewer Europeans than there are today. Japan will lose 60 million people. Russia 30 million."

Drivers? Is the author under the impression that the only use for petroleum is *gasoline* and the only users are shoppers and commuters?! What about agriculture? Mining? Commerical transportation? Manufacturing? Plastics? Pharamceuticals? Asphalt? etc...

Pop quiz: what is the rate of GLOBAL population growth? (Hint: all these people will want to eat)

Cherry picking a half dozen nations whose replacement rate is low isn't analysis - it's blatant bias and distortion (in the best case, ineptitude) seemingly intended to introduce false data. Precisely the problems this piece of "analysis" (and I do use that word loosely!) purports to address.

Writing an essay on misinformation and then, within it, promulgating misinformation - Orwell would be proud.